Last year saw output for the sector recover as a whole, with civil engineering leading the way, largely as a result of energy infrastructure projects, especially renewables. Commercial construction has seen more of a steady increase driven by improving domestic conditions and retrofit demand. There was a dip in activity leading up to the budget and some companies may well delay spending decisions, especially if in sectors most impacted by the recently announced National Insurance Contribution and National Living Wage increases.

Housebuilding activity picked up following the government’s pledges around ambitious new targets, but has since fallen, largely as a result of lack of detail around how these will be achieved together with ongoing fragile consumer confidence and the belief that interest rates will be slower to fall than originally anticipated. 

The government’s overall commitment to significant infrastructure investment is seen as a positive, however the key will be the successful delivery of these projects, especially considering the current shortage of skilled labour. The creation of Skills England aims to close skills gaps, recognising that construction is key to powering both economic and clean energy growth. Investing in training and development to expand the pipeline of talent is critical for companies looking to capitalise on increased public and private sector spend.

Regulatory changes have been challenging for the sector to navigate, especially the Building Regulations and the Building Safety Act, whereby the new minimum standards and increased regulatory oversight are likely to increase costs and project timescales. Successful collaboration with suppliers is key to meeting new regulations and standards. 

In fact, prioritising sustainability by responding to growing demand throughout the value chain by committing to building practices that incorporate greener materials and energy efficient designs could result in significant competitive advantage. The proposed Planning Reform has been welcomed by the industry and is likely to boost output further by speeding up planning decisions and opening up new land for development, however the key to success will be in the detail, which is yet to be released. 

The adoption of digital technologies such as Building Information Modelling (BIM) and AI is revolutionising the construction industry as it drives efficiencies, cost savings, and improved quality.​ We’re keen to support digital and technology investments in the sector, which will not only help improve margins through increased visibility and better monitoring, but also enhance project planning and enable real-time monitoring and predictive maintenance. 

Although construction was not mentioned specifically in the recent Industrial Strategy Green Paper, the focus on Net Zero, Great British Energy and the associated infrastructure required will no doubt create new opportunities for the industry. 

The 2024 Autumn Budget’s proposed public sector spending includes significant infrastructure investment (ranging from rail route upgrades and connections to road repairs), support for the Affordable Homes Programme and Warm Homes Plan, as well as funding to tackle the backlog of repairs for schools and hospitals, which will all have a positive impact. 

The new funding for new energy-efficient buildings, use of eco-friendly materials, and retrofitting existing structures to meet modern energy standards is also likely to benefit the sector. Our ongoing partnership with the Supply Chain Sustainability School will help companies develop the new skills required for this. 

2025 and beyond is therefore likely to see further growth and opportunities for the Construction industry, with the sector playing a key role in the government’s spending plans as well as the UKs transition to Net Zero.” 

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